Restaurant Marketing Budget: How to create a marketing budget for your restaurant?

Marketing is crucial to the success of a restaurant. Every restaurant owner is plugged-in to the need for in-store promotions and advertising through traditional channels to reach their target audience and build brand awareness. However, in the millennium, where each time customers want to try out a new place, they check online reviews and visit the restaurant’s website, marketing your restaurant on digital channels is no longer an option. Engaging your customers via both offline and digital channels like social media, email marketing and ads keeps your restaurant top of mind and helps you expand your customer base.

But, with the increasing number of marketing channels there has been a noticeable surge in marketing expenses. With big brands splurging on marketing campaigns, small restaurant owners are often left confused about the size and efficacy of their marketing budget.  Preparing a restaurant marketing budget helps you understand your goals and objectives and prioritize your budget allocations.

In this article, we will discuss how you can plan and create a budget for marketing your restaurant to ensure that you are reaching your marketing goals without wasting money.

Why is marketing important for restaurants?

Marketing helps you establish your brand  to stand out amongst your competitors and reach out to potential consumers. Engaging your customers via both offline and digital channels like social media, email marketing and ads keeps your restaurant top of mind, expands your customer base and builds long term loyalty. Social media channels provide the perfect platform to engage with your customers on a personal level and provide quick responses to customer queries. It also helps with restaurant promotions, such as the announcement of new menu items, discounts and special events.

What is multi-channel marketing and why do you need it for your restaurant?

Multichannel marketing integrates traditional and digital marketing channels to engage existing and potential customers with a consistent brand message. Today, customers expect  a consistent experience across channels and quick resolution to problems. A multi-channel approach helps you create, and deliver personalized customer experiences that are consistent across all channels. 
It also helps you to expand your reach and build a loyal customer base across channels.

What is the best strategy for marketing your  restaurants?

Promoting your restaurant on multiple channels helps you reach a wider audience to generate incremental revenues.
a. Use Organic Social Media
b. Mobile- friendly Website optimized for local search
c. Reputation management
d. Email Marketing
e.Promote on Local Facebook Groups
f. Local Marketing
g. Traditional and Digital Advertising

Why do you need a restaurant marketing budget?

While most restaurant managers agree on the importance of marketing, however, with the increasing number of marketing channels there has been a noticeable surge in marketing expenses. With big brands splurging on marketing campaigns, small restaurant owners are often left confused about the size and efficacy of their marketing budget. Preparing a restaurant marketing budget helps you understand your goals and objectives and prioritize your budget allocations

How to create a restaurant marketing budget?

1. Set Out Your Marketing Objectives And Goals: You should select four to five main objectives and focus on them to get the best results from your marketing efforts. 
2. Select Marketing Channels: Analyze the various alternatives available to determine 4 to 5 offline or online channels that offer the best chance of reaching your marketing objective.
3. Decide On A Overall Marketing Budget
4. Determine Your Marketing Mix: Revisit your objectives to determine the best allocation of your marketing budget between the different channels.

How to create a marketing budget for your restaurant?

1. Set Out Your Marketing Objectives And Goals

Before you allocate a budget for marketing your restaurant, you should set out clear and well-defined marketing objectives. If your marketing efforts lack direction, you may end up spending a lot without any significant results. Your restaurant marketing objectives help you lay down a marketing strategy and help you to determine how much you need to allocate to your restaurant marketing budget.

Your marketing objectives will depend on the nature of your restaurant and the time that you have been in business. Marketing objectives are your broad aims and can include things like

  • Brand Awareness 
  • Better Reach and Visibility
  • Increasing Repeat Visits 
  • Increasing Average Order Size 
  • Increasing Online Orders
  • Build Customer Loyalty
  • Improve Customer satisfaction

Set Smart Goals And Arrange Them In Order Of Priority

When you attach numbers and deadlines to these objectives, they become specific, measurable and achievable goals. Setting SMART Goals not only allows you to focus your efforts and  time but also help you allocate your budget efficiently to maximize returns.

Once you have come up with an initial list of objectives, the next step is to parse and reassess your list to arrange it in order of priority. You should select four to five main objectives and focus on them to get the best results from your marketing efforts.

2. Marketing Channels

While traditional advertising channels are still effective in driving awareness and footfall, the sway of digital channels like social media, email marketing, digital ads in keeping your restaurant top of mind is certainly undeniable.

How much are restaurants spending on different advertising channels Restaurant Marketing Budget
Data Source: POS tab

a) Organic Social Media Marketing

Social Media is where most of your potential customers are spending the majority of their time. It is therefore one of the primary channels to reach out to your customers and tell your brand story in a creative way. Organic social media marketing is one of the cheapest and most effective ways to promote your daily specials, menu additions and generate customer engagement.

How much are restaurants spending on different social media platforms: Restaurant marketing budget
  • Instagram is the perfect platform to share awesome images of your restaurant’s food, build a community, foster engagement and tell your brand story.
  • Facebook 91% of the people in the food and restaurant industry use Facebook to build their brand, engage with their customers, and drive more traffic into restaurants.
  • Twitter: Twitter, the third most popular advertising channel for restaurants, can be used by restaurants to engage and attract customers. In fact, food is one of the most talked-about topics on this network and it is .
  • Google My Business Visitors can find important information about your restaurant  like directions, phone number, hours of operation, and can even leave reviews or Book A Table at your restaurant directly through GMB.
  • YouTube:  Although YouTube is less popular among restaurateurs (only 14% of restaurants report using it), yet it remains a relevant channel. The trick to restaurant marketing on YouTube is providing content that customers value such as cooking shows, staff interviews, historical tours and sharing exclusive event videos and footage.
Other Popular Channels

b. Digital Advertising

With the gradual decline in organic reach over the years, brands are witnessing a slow growth on social media channels. Advertising  may be the only option left to brands to reach a wider audience on these channels. Most social networks allow you to run highly targeted local ads to grow your customer base and increase conversions. However, this does not mean that you should use all of them.

You should spend some time studying the various social networks to determine where your target audience resides and focus your advertising efforts only on those channels. The advertising cost would depend on the platform as well the size of your audience and the frequency with which you want to advertise.

 Let us takes look at the some of the popular advertising channels 

Google Ads Platform

Google Ads allows you to run ads for your restaurant on Google or partner sites. These are pay per click(PPC), which means you are charged only when someone clicks on your ad.

There are several campaigns available on Google Ads:
  • Search campaign on Google and the partner sites: You can set up ads for relevant keywords that describe your restaurant business. Your ads are shown to anyone who uses these keywords in their search query. 
  • Display campaign:  Google shows your ads on the partner sites based on the audience or the topic you have targeted. 
  • Universal app: You can use these ads to promote your apps on Google search console, Google play store, YouTube and partner sites.

Promoting your business on Google is a good idea as this would help you reach out to more customers globally as well as locally. You can also run remarketing ads on Google to show your ads to people visitors.

Advertising on Facebook and Instagram 

You can run several types of ads on Facebook and Instagram including Photo Ads, video ads, carousel and stories ads. Both these platforms allow you to target audiences based on interests and demographics. You can also add call-to-action buttons like Book now, Call now, Contact us and Get directions to increase conversions from your ads.

YouTube Ads

Running video ads on YouTube is an excellent way of reaching out to your customers. .

There are several YouTube ads format you can choose from:

  • In-stream ads are played before, during or after a video on Youtube or partner networks. You are charged only  when a user watches the ad for more than 30 seconds or interacts with your ad.
  • Discovery ads appear next to the related YouTube videos or as a part of the YouTube search result. Again, you will be charged only when a user watches your ad or clicks on it.
  • Sponsored cards display content that is relevant to a video that an user is viewing. 
  • Bumper ads: It is a six-second video ad and you are charged each time your ad receives 1000 impressions
  • Display ads: These ads appear to the right of the feature video and above the video suggestions list.

c. Email Marketing

Email marketing is another cost -effective way to promote your restaurant.  Customized campaigns for each of your target customer segments helps you to deliver more value to your customers and yield higher conversions. You can personalize your marketing messages by segmenting your customers according to their demographics, interest or purchase history. Here are a few examples of customer segments.

  • Purchase history
  • Coupons Redemption Rate
  • Visit frequency
  • Average spends
  • Food Preferences
  • Cart Abandonments
  • Loyalty Members
  • Last purchase

d. SMS Marketing

With a 98% open rate and a conversion rate of 45%, text messages are an inexpensive way to reach your customers. 

Restaurants can utilize sms marketing to send out promotional messages such as time-sensitive offers, mobile coupons, weekly specials and exclusive offers to drive repeat business by regular customers. You can also send out transactional messages such as texts when a customer’s food or table is ready or texts to streamline pickup orders or reservations by SMS to improve the customer experience at your restaurant. 

e. Chatbot Marketing

Chatbots can help you deliver personalized customer experiences to win new customers and generate incremental sales. The growing popularity of Chatbots in the Restaurant industry can be attributed to the wide array of services for which they can be put to use from engaging customers,  taking orders or reservations, personalizing recommendations, to promoting special deals. Popular chains like Burger King and Taco Bell are already leveraging the fun interactive interface of their restaurant’s chatbot to engage with their customers and to simplify delivery and takeaway. 

f. SEO Optimized Website and Local Search Optimization

One of the primary goals of any marketing strategy for restaurants is to increase the local reach and visibility. Registering your restaurant in local directories helps you reach more local customers and ensures that they find accurate information about your business including menu, cuisine, location, website address, phone number.

g. Mobile Marketing

A robust mobile application could help you drive engagement, generate sales and build long-term customer loyalty. With a mobile app, you can

  • Take orders or reservations
  • Send out location based deals to attract more customers to your store
  • Give updates like order confirmation or delivery status, or offers on items left in the cart.
  • Notify users about special offers, events, new additions or app updates.
  • Use device location information to send out personalized messages
  • Run effective loyalty programs

With the growth of technology, developing an app for your business no longer puts a strain on your pocket, however, maintenance and updates may require significant resources.

If you feel that it makes sense for your business to have an independent app, your main concern should be customer acquisition and retention. It can be tough for consumers to discover your app in a crowded market. The right kind of app marketing campaign can help your app build an audience and retain it in the long-term.

h. Direct Mail 

Sending out flyers or menus by direct mail can help restaurants reach local customers and can also be used to promote events. Many single-location restaurants find this option expensive as apart from printing, they also need to spend on postage.  The alternative is to drop off flyers to local neighborhoods. 

i. Billboard Advertising

Billboard advertising has been used by restaurants for quite some time. However, this mode of advertising is expensive and it is often difficult to measure the return on investment.

j. Community Events & Sponsorships

Local marketing initiatives such as partnering with local organizations and sponsoring events can be an excellent way to engage your community and build a loyal customer base.

Restaurants can partner with local organizations including churches, schools and NGOs by providing coupons or gift certificates for their events. You can also choose to sponsor local events or organizations. Most sponsorship arrangements ensure that your restaurant’s name and logo is included in any or all marketing activities related to the event.

Hosting fundraisers on behalf of local organizations is also an effective way to market your brand and attract new customers to your restaurant.

3. Select Marketing Channels

Now that you have a broad picture of all the marketing channels available to you, the next step is to select the marketing channels that can help you realize your goals. Spreading your marketing dollars thinly across too many platforms can hurt performance and make it difficult to measure performance.  

Figure out the channels that are most popular with your target audience, or the channels where you can get maximum reach, and engagement. Some channels may be expensive but offer a better ROI while others may provide you better engagement and word-of mouth advertising. While reach and engagement may be good for brand awareness, you should also compare channels on the basis of conversions–on which platform do most of your visitors convert into buying customers.

Selecting channels for marketing- Restaurant Marketing Budget

Analyze the various alternatives available to determine the offline or online channels that offer the best chance of success for the given marketing objectives.

You can carry out your own research, learn from your competition  or consult your digital agency to compare various channels and the associated costs.  

4. Deciding The Overall Marketing Budget

Once you have finalized your marketing objectives and the channels that you plan to use its time to work out your overall marketing budget. A lot of your marketing strategy and budget depend on the nature of your restaurant and the time that you have been in business. 

The overall marketing budget- restaurant marketing budget

a. You’re a brand-new restaurant

If you are just starting out, you need to spend more on marketing to establish your brand in the market.  On an average, a new restaurant spends 10 to 15 percent of their sales on marketing initiatives depending on the competition in their area. 

b. Your restaurant is established and growing

If you have been in business for some time, you may already have an established customer base. At this stage, you may not need a very aggressive marketing policy, but you need a sustained marketing effort to reach out to your target audience and attract new customers. Most established restaurants spend somewhere between 3-6% of their sales on  marketing depending on their profit margin and the competition. You can start by allocating 4% of your sales to marketing and adjust as you go along.

Sometimes, successful restaurants slip into complacency and justify a spend of less that 3% by pointing to their success. However what they do not take into account is aggressive marketing approach by new entrants into the market which may eat into their customer base.  A budget of less than 3% can only be justified if your restaurant is in dire circumstances, and in that case you may need to recourse to some innovative and cheap strategies to continue to promote your restaurant.

Similarly, restaurants  spending over 6% of their sales on marketing must analyze the return on investment on an ongoing basis to justify the spend.

c. Your revenues are stagnating or in decline

You may need to allocate an additional 2-3% to your marketing budget to try out new marketing strategies or aggressive approaches to attract new customers.

5. Marketing Mix

Revisit your objectives to determine the best allocation of your marketing budget between the different channels that you had finalized before. Spend your marketing dollar where it will have the best return for your restaurant

marketing mix or budget allocation to different channels and approaches: restaurant marketing budget

Well established restaurants already have a set of marketing strategies that have worked well for them in the past. If you fall in this category, you should be allocating 60-70% of your total budget to the channels and strategies that have yielded the highest ROI in the past. However, adopting the same strategy over and over or copying what your competitors are doing may lead to stagnation. So, you should devote a certain percentage of your budget to trying out new approaches every quarter. You should not be in a hurry to change strategies as any new approach requires at least 3-4 months time and consistent efforts before it starts yielding results. Perform small-scale tests and analyze results and before proceeding to scale over a period of time.

In any given month your marketing budget should be proportional to your sales volume. Most restaurant owners make the mistake of not adopting aggressive  marketing strategies during the busy season as sales during the time are already good. 

Loyalty Programs

Restaurants usually end up spending a large portion of their budget on strategies that are largely focussed towards attracting new customers. However, new customer acquisition turns out more expensive than retaining an existing one. A great marketing plan allocates a reasonable portion of the marketing budget on building a robust loyalty program to generate incremental sales by increasing visit frequency, average order value or party size.

Wrap up

When business owners need to cut expenses, the marketing budget is usually the first to go. Marketing, however, is essential for growth, and it is advisable, at this stage, to sustain the current marketing expenditure to increase sales. The best approach is to revisit your budget allocation and focus on channels that are yielding the highest return on ROI. Check how you are spending your budget and figure out which channels are yielding most results and divert more budget to them. Successful marketing requires you to experiment constantly and optimize campaign on an ongoing basis.